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Medicaid Expansion: The High Cost of Ideology

What if you were faced with a choice: stick to your beliefs, lose money and help fewer people. Or take the practical road, help more people and gain more money?

Such a quandary faces state leaders opposed to Medicaid expansion.

A lot of money is at stake - $4.3 billion over 6 ½ years. More importantly, lives are at stake. In Wisconsin, 155,000 now uninsured poor adults could receive care through Medicaid.

Governor Walker recently announced Wisconsin would not accept the feds’ offer to pay Medicaid coverage for poor people who have fallen through the cracks because they do not have young children.

For years, Medicaid has covered poor parents and caretakers of those with children under age 19, but not those poor single or married adults without young children.

Health reform changed this by including all adults who make under about $15,000 a year (133 percent of the federal poverty level). Couples can make a little more than $20,000.

When the Supreme Court upheld the federal health law, Justices gave states an option to not expand coverage to the poor so-called “childless” adults. Fourteen Republican governors opposed to health reform for ideological reasons have exploited this option.

Governor Walker announced he would add some of the poor without young children but would miss the mark set by the feds by about 35,000 people. He would also drop coverage for those who earn a bit more but have children under age 19..

Specifically Walker proposed providing BadgerCare to adults without children under age 19 if the individual made less than $11,490 ($15,510 for a couple). He proposed dropping BadgerCare for adults who make more than 100% of the Federal Poverty Level (FPL) or $19,530 a year for a family of three.

Children in these families would keep coverage. Federal law prohibits states from dropping care for currently covered children and pays 95% of these costs.

Nearly 90,000 adults would be losing BadgerCare. More than half of these families are just marginally over the proposed cut-off line.

Caught in the cracks between the state’s decision and the federal law would be at least 35,000 people. The new federal health care law pays subsidies and tax credits for people buying insurance through the health insurance exchanges.

But those families, who make up to 133% of FPL or just under $26,000 for a family of three, will not receive any subsidies or tax credits. This is because under the federal plan, these families should receive Medicaid. The vast majority of those who now receive BadgerCare – over 80% - have an income at or below 133% FPL.

It is possible the Governor is hoping the feds consider his expansion adequate to qualify for more federal dollars. This would provide the Governor with the opportunity to claim entitlement reform at the same time he took advantage of the 100% match offered all states on the newly eligible adults.

If so, Wisconsin stands to gain a huge influx of federal money. The nonpartisan Legislative Fiscal Bureau estimated the state would save a net $164 million in state dollars and gain another $4 billion in new federal dollars if the governor continues with his plan but just raises the annual income threshold for newly eligible adults from $11,490 to $15,282.

Expanding BadgerCare to include all those up to 133% FPL only makes sense. Not only for the thousands of lives but also for the $4 billion the state brings in over the next six and a half years.

What will the state lose by turning back $4.3 billion over the next 6 1/2 years?

35,000 parents will be left without care and without subsidies to buy it; another 73,000 so called “childless adults” will again be put on waiting lists. They too will be ineligible for subsidies.

The president may be betting that eventually the states will come in – as they did with the creation of Medicaid itself. Back in 1965 only half of the states participated but over the next few years almost all joined up. If saved lives didn’t trump ideology then, money did.